CHEUNG SAU CHING AND OTHERS v. FASHION GARMENT MANUFACTORY LTD

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J U D G M E N T

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Cons, V.-P. delivered the judgment of the Court:

1. This is an appeal from the decision of O'Dea J., gived on the 22nd June last year, by which he made an award reflecting severance pay, wages in lieu of notice and pro rata annual leave payments in favour of a sewing worker against the Garment Manufactory by which she had at one time been employed. The claim had originally been one of seventeen similar claims initiated in the Labour Tribunal, but had by consent been taken as a test case, and transferred to the High Court on the ground that important issues were concerned. The Plaintiff was the original 7th Plaintiff and was referred to as such throughout.

2. The events which triggered her claim occurred in April 1986 when the Defendant factory decided to close down for an expected period of six weeks so that it could refurbish its premised and replace its machinery. The factory did not wish to lay off its workers, which would have entailed the payment of severance money, and at the same time it wanted them to return to work as soon as the renovation had been completed.

3. The provisions of the Employment ordinance Cap, 57 which cover a situation of this kind are to be found in Sections 31B (1) and 31E-

"31B(1)    Where an employee who has been employed under a continuous contract for a period of not less than 24 months ending with the relevant date -

(a) is dismissed by his employer by reason of redundancy; or

(b) is laid off within the meaning of section 31E,

the employer shall, subject to this Part and Part VC, be liable to pay to the employee a severance payment calculated in accordance with section 31G.

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31E(1)    Where an employee is employed under a contract on such terms and conditions that his remuneration thereunder depends on his being provided by the employer with work of the kind he is employed to do, he shall for the purposes of section 31B(1) be taken to be laid off where the employer does not provide such work for him on at least a total of 12 normal working days in any period of 4 consecutive weeks and whereby he is not entitled to any remuneration under the contract for such period:

    Provided that any period during which an employee is not provided with work because of a lock-out by his employer, or as a result of a rest day or holiday, shall not be taken into account in determining whether an employee has been laid off.

    (2)  The continuity of a contract of employment of an employee shall not be treated as broken by any lay-off as a result of which no severance payment has been wade.

    (3)  For the purposes of this Part the 'relevant date' in respect of the right of an employee to a severance payment arising by reason of lay-off means any day on which the period of 4 consecutive weeks referred to in subsection (1) has expired."

4. Proceedings in the court below came on for hearing on the 6th June. Included in the bundle of pleadings placed before the learned judge was a Statement of Agreed Facts. After setting out the nature of the Defendant Company and the Plaintiff's position as a sewing worker, the Statement continued -

"3. The Defendant sought advice from the Labour Relations Office at Lai Kok Estate, Kowloon, in March 1986 and pursuant to the advice so given, the Defendant announced its intention in the morning of 18th April 1986 to close the factory premises for renovation for about 4 to 6 weeks and that during that period the Defendant would pay compensation to the employees on the basis of 12 working days' wages per a four week period and the employment of all such workers would continue.

4. After the aforesaid announcement, some of the said workers (including the 7th Plaintiff) went to the said Labour Relations Office to make enquiries as to the adequacy of the compensation. As a result a meeting was held in the afternoon of 18th April 1986 between Mr. Bejamin Lung, Mr. W.H. Young and Mr. Lam Fung of the Defendant on the one part and Cheung Sau Ching, the representative of the workers on another part, together with a Labour Relations Officer, Mr. K.Y. Lee, in the office of the said Mr. Lee.

5. At the end of the aforesaid meting, after clarification front the said Labour Relations Officer, it was agreed between the Defendant and the said Cheung Sau Ching on behalf of all the workers (including the 7th Plaintiff) that the workers would accept the compensation for the close-down in terms of 12 days' pay per a four week period on the basis of 8 hours' pay per day. It was also agreed that after the renovation work was completed at the end of May 1986, all the workers would go back to work.

6. On 20th May 1986, purportedly pursuant to the said agreement, a sum of $343,00 was paid by the Defendant to the 7th Plaintiff.

7. During the renovation period from 19th April to 31st May 1986, no work was provided by the Defendant to the 7th Plaintiff."

5. It is conceded by Mr. Yu, who has appeared for the Defendant before us, but not below, that the amount referred to in paragraph 6 was well below that which was properly due under the agreement set out in paragraph 5. It seems to us not unlikely that this factor triggered the ill-feeling of the Plaintiff towards the Defendant and was responsible for the subsequent claims of herself and her colleagues and their later refusal to return to work.

6. Further to the Statement of Agreed Facts evidence was led before the judge from the Plaintiff and her representative Cheung Sau Ching on the one hand and from the General Manager of the Defendant, the factory supervisor and the person in charge of the administration on the other. We are told that on the second day of trial the learned judge gave leave to extend and to amend the pleadings, although no note of this appears in his record of proceedings and no reference thereto is to be found on either document which apparently resulted therefrom. We thus find on the file a Rejoinder by the Defendant alleging a further term to the agreement of the 18th April, namely that the period of compensation was to be calculated only as from the 1st May, rather than the 19th April, as 12 days work had already been provided in the month of April. We find also a Re-Amended Reply, alleging, as an alternative to the suggestion that the agreement in question, (admitted by paragraph 5 thereof as well as in the Statement of Agreed Facts,) was void by reason of Section 70 of the Ordinance, was agreed merely as a reflection of the terms imposed by the Ordinance and had further not been fulfilled.

7. As to the former the judge's finding is not as clear as it might be, but it would seem that he was not satisfied that the Plaintiff's representative had agreed to any such term. As to the latter, although the judge refers to the employees having in a position "where they had no option but to accept what they were being told was the Defendant's minimum requirements under the law", the full manner in which he dealt with the effect of Section 70 leads us to think that he did not perceive any retraction by the Plaintiff from the agreement so clearly accepted by her in paragraph 5 of the Statement of Agreed Facts.

8. The primary issue was the applicability of Section 31E in the circumstances. If the Plaintiff were taken thereunder to have been laid off, she would be entitled to severance pay under Section 31B, and to the other amounts which she claimed. As to this: the judge said -

"... section 31E does not refer to the number of working days on which work is provided but rather the number of working days in any period of four consecutive weeks on which work is not provided. The distinction may seem illusory but it has far-reaching consequences in this particular case. As the workers were employed from Monday to Saturday inclusive there would be 24 normal working days in a four week period and were the Defendant only to provide work on 12 of those days it must follow that he has failed to provide woke on the remaining 12 days and provided the workers are not entitled to any remuneration under their contract for such period (i.e. the twelve days on which no work was provided) they can be taken to be laid off."

9. With the greatest respect to the judge below, and to Mr. Louis Chan who supported the judge's interpretation with such enthusiasm, we are quite unable to read the section in that way which would make a travesty of the language used and the obvious intention behind the section. That is to be found concisely expressed in the word's of Hunter J., as he then was, in Fan Kam Fung and Others v. Sonley Handbags Manufactory unreported Labour Tribunal Appeal 6 of 84 21st June 1984 -

"The obligation of the employer under section 31E, if he is to avoid a deemed 1ay-off position seems to me to be capable of being summarised in this way. In any period of four consecutive weeks, he has to provide either a total of 12 normal working days or payment in lieu. I reach that conclusion because of the form of the section where you get the words 'where the employer does not provide such work for him on at least 12 normal working days in any period of four consecutive weeks and whereby he is not entitled to any remuneration under the contract for such period'. As I see it the intent of the section is that the person is to have 12 working days or payment in lieu."

10. The Plaintiff did not actually receive satisfactory payment in lieu, but by virtue of the agreement of the l8th April was entitled to that payment and remains entitled even now to the unpaid balance, possibly with interest. However, unfortunately for her, entitlement is the criterion laid down by the section and the agreement of the 18th April therefore removes the ground from under her claim.

11. For that reason we allow the appeal set aside the judgment entered below and enter instead judgment for the Defendant.